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Customers know the kind of service they want—timely and respon­sive, appropriate quality given their budget, and value for the money they plan to spend. Studies show that repeat customers are the most profitable part of the value mix for companies. Customers are pleased when the product and service received meets or exceeds their expecta­tions; they are disappointed, and often angry, when it does not.

How can your company build service chain solutions that ensure you truly satisfy the customer, each and every time? How can you measure success in the eyes of the customer? How does each employee know the results of their efforts so they can contribute to the satisfaction?

The objective of this paper and related presentation is the discus­sion of a simple technique for evaluating the customer service event, and ways to measure the value and satisfaction from the customer's point of view. It will also demonstrate ways to build service events into successful service chain solutions and experiences. The simple model we will use is called the "bill of service," and we will explore it in just a moment.


The APICS body of knowledge has a definition of the value stream. It is "the processes of creating, producing, and delivering a good or ser­vice to the market. For a good, the value stream encompasses the raw material supplier, the manufacturer and assembly of the good, and the distribution network. For a service, the value stream consists of suppli­ers, support personnel and technology, the service 'producer,' and the distribution channel. The value stream may be controlled by a single business or a network of several businesses." The value stream uses service chains to link the participants in the network.

There are several key concepts here. One is the link between a ser­vice producer and a service customer. This link is the event of the sup­plier/customer interaction. At each touch point between the supplier and customer, a service event happens. From the APICS Dictionary, an event is "an identifiable point in time among a set of related activities." So the service event is the point in time when the service is provided and a customer buys or consumes the service. Service events are the constants between the supplier and the customer of the service.

Another key point is the "network" of services: a series of other supporting service events linked across time and place to provide the specific service event being consumed.

Service events are recurring, if correctly delivered. The customer feels that value has been obtained and will seek a repeated event from the supplier the next tune the service is needed. The sum of the series of events form the basis of the service experience. It is usually over some period of time that a customer builds up knowledge and expecta­tions about the service provider, and this then influences their decision in determining whether the service event will be consumed by the cus­tomer again.

Consider your own personal behavior. When you enjoy eating at a particular restaurant—the food, the ambiance, the waiter's attention to your needs—you may return over and over again to repeat the event, and build up experience. If over time you continue to enjoy the experi­ence, you tell your friends, so they too may enjoy the experience.

Some experiences occur over a long period of time. Some are con­centrated into a brief time period. For example, a day at Walt Disney World with the children will create an experience for each person. Oth­ers are less frequent. For example, while you may buy a wedding dress once in a lifetime, the dress is a component for a major event that will be part of your experience the rest of your life. Other services are purchased once and then consumed over and over again. Examples include buying telephone services, obtaining a new health service plan, buying an auto­mobile, or buying capital equipment.


Every company is in the service business. Whether the company is a pure service company or a manufacturing company, your organization offers services in support of, or in addition to, the products sold. Ser­vice organizations such as banks, restaurants, schools, hospitals, air­lines, hotels, phone companies, and government agencies now account for more than 80 percent of the U.S. economy.

Manufacturing companies too spend significant resources offering services externally to customers, and internally as part of the organiza­tion. For manufacturing companies, direct manufacturing labor is now less than 10 percent of manufacturing cost, so ignoring material costs, services are a big share of their operations.

All companies perform service processes. Just as manufacturing companies produce products and offer the supporting service to sell, distribute, and repair, the core processes of the service organization are these operating processes to provide the service. Consider a hotel chain. Is providing a bed for the night the only service they really provide? No, of course not. They provide reservation services, housekeeping services, check-in and check-out services, parking services, food and beverage services, and often conference center services, too. How do all these services contribute to the customer experience? We will get to that soon.

To Be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 11

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